ONE of the on-going challenges any app developer faces is seeing a chunk of its revenue going to the platform owner of the app store, whether it is Apple, Google or Microsoft, which has led to independent commerce engines for in-app purchases.

In early December last year, one player, Swiss-based Lotaris, rolled out its in-appCommerce for Windows 8 Early Release Program, a three-month offer available to the first 300 registrants, with which developers get to keep 100% of their revenues for 90 days after account activation.

After the three-month period, these developers – plus any who sign up afterwards – will see only about 10% of their revenue go to Lotaris, rather than the 30% Microsoft collects. Microsoft stays out of this transaction, as long as the SDKs (software development kits) for the in-app purchase engine has Windows Store certification.

Lotaris, which specializes in mobile application licensing and transaction management for developers, independent software vendors and software publishers, says its in-appCommerce engine for Windows 8 offers app developers a compelling alternative to the Windows Commerce Engine, enabling direct user relationships and revenue maximization with a full range of app licensing and payment functions.

It is not just about retaining a bigger chunk of your revenues either, says Lotaris founder and chief executive officer Robert Tibbs (pic), who now runs his company from its office in Singapore and spoke to Digital News Asia (DNA) via email.

“The fundamental advantage of Lotaris is in the flexibility and immediacy of addressing market opportunities,” he says. “Mobile app developers have a variety of balls to juggle – the first issue is how they are going to monetize.”

There are a variety of models, he notes, such as ad-based revenues, usage-based fees, time- or location-related charges, and so on. Depending on the app, some developers may want to offer elements of it for free, with perhaps a fee for premium features. There may even be a trial period.

There are other balls to juggle as well, Tibbs says. “What channels and business models are appropriate? Should they distribute through one of the major app stores, and only app stores?”

There are also other decisions for the hapless developer to make, such as which operating system (OS) or platform to use, what regions to make it available to, and even what payment models to use.

“All of these are critical decisions, and depending upon the payment partner, channel or licensing system used, they may be restricted in how they can answer any of these questions,” says Tibbs.

“Our response is simple ... the developer should have the opportunity to painlessly pursue any of the options above, and to seamlessly and instantly be able to adapt and change business models, channels or whatever it wishes as its business opportunities require.

“Only Lotaris offers this global integrated platform from one partner,” he claims, adding that this makes it more cost-effective for the developer.

Show me the money

Just as importantly, by going to Lotaris instead of the app store’s own e-commerce engine, whether from Apple, Google or Microsoft, the developer has a direct relationship with the user, according to Tibbs. The customer belongs to the developer, not the app store.

“One of the challenges facing developers distributing apps via the online stores is that they are one step further away from their customers, which limits their ability to influence the sale, or to up- or cross-sell,” he says, pointing to a Lotaris video that explains further.

Lotaris believes it can show developers the money too, claiming that going through its in-appCommerce engine means developers pay “significantly less revenue” than Microsoft’s 30% cut.

“We are looking at 9.85% plus a US$0.35 transaction fee,” says Ian Ho, director of Lotaris’ corporate development in Asia. “To show how much difference this makes, let’s take the Flurry report of the average spent on iOS and Android games as an example.

“If a developer uses Microsoft’s 30% solution, its net revenue is 0.7x14 or US$9.80. If a developer uses Lotaris, its net revenue is 0.9015 multiplied by 14 minus the 35 US cents.

“Hence our solution allows developers to earn 25% more revenue than they would be able to otherwise make,” Ho adds (click comparison chart above to enlarge).

This means “developers will be able to see how their customers use their apps, and plan marketing to match their preferences,” says Tibbs. “They will be able to see which features customers access, and when.”

“With these real-time insights, developers can target the right customers with new features or licenses when they’re most likely to buy.

“Developers will also be able to communicate with their customers directly via alerts and in-app messaging in multiple languages. The platform enables them to set up campaigns, discounts and offers for both licenses and digital goods,” he adds.

The kinder, gentler Microsoft

Lotaris believes Windows 8 has given new impetus to the OS war. Citing research which shows that 10% of Windows Phone gamers spend more than US$25 a month in the Windows Store, compared to just 4% on both iOS and Android, the company says this offers great monetization opportunities for Windows 8 app developers.

Microsoft launched Windows 8 in October, the most radical revamp of its flagship OS and an attempt to check the progress made by iOS and Android into the business space. However, it launched to great fanfare but not much sales, which The New York Times described as tepid.

That hasn’t dampened Lotaris’ enthusiasm however. “Every mobile OS has had its early stages,” says Ho (pic). “We recall our decision to develop for Android in its early days.”

“We believe that Microsoft will be a factor going forward, and have seen very favorable reviews of both the OS and some very attractive devices that have been launched to exploit it,” he adds.

Ho says that the most important issue is that an e-commerce partner should not restrict which mobile OS a developer can choose.

“Specifically regarding Microsoft, it should be noted that it has done something that Google and Apple haven't done, and that is to give developers the option to arrange their own in-app commerce, in which case Microsoft doesn’t charge for selling through its (Windows Store).

“This is a great opportunity for developers, as long as they choose the right platform. It's a challenge for even the largest independent software vendors to create their own platform, and so the fit of our solution to this market is perfect.

“Not only will developers benefit from the sophisticated in-app functionality immediately, but they get to keep significantly more of their revenue at the same time,” says Ho.